FinOps Series : Pt 2 - New to FinOps, Relax finops framework is here 🦸‍♂️

Finops.org as a community has worked hard to come up with a framework for individuals and businesses to have a great starting point

Introduction to the FinOps Framework

The FinOps Foundation provides a comprehensive framework to manage and optimize cloud financial operations. This framework is designed to help organizations understand their cloud usage and costs, quantify business value, and optimize cloud usage. Let's break down the key components of this framework as depicted in the image:

Principles

1. Teams Need to Collaborate 🤝: Collaboration is crucial among finance, engineering, and operations teams to manage cloud costs effectively.

2. Decisions Are Driven by Business Value of Cloud 📈: All cloud-related decisions should be aligned with the overall business objectives and value.

3. Everyone Takes Ownership for Their Cloud Usage 🧾: Each team and individual should be accountable for their cloud usage and costs.

4. FinOps Data Should Be Accessible and Timely ⏱️: Accurate and up-to-date data is essential for making informed financial decisions.

5. A Centralized Team Drives FinOps 🏢: A dedicated FinOps team should lead and coordinate cloud financial management efforts.

6. Take Advantage of the Variable Cost Model of the Cloud 📊: Leverage the flexibility of cloud pricing to optimize costs dynamically.

Framework Credit: finops.org

Domains & Capabilities

The framework is divided into three main domains, each with its specific capabilities:

1. Understand Cloud Usage & Cost 💡:

• Data Ingestion: Collecting detailed cloud usage data.

• Allocation: Distributing cloud costs accurately across teams and projects.

• Reporting & Analytics: Analyzing cloud spending and usage trends.

• Anomaly Management: Detecting and addressing unexpected cost spikes.

2. Quantify Business Value 💵:

• Planning & Estimating: Forecasting future cloud expenses.

• Forecasting: Predicting cloud costs based on usage patterns.

• Budgeting: Setting and managing cloud expenditure budgets.

• Benchmarking: Comparing cloud costs against industry standards.

• Unit Economics: Analyzing the cost per unit of cloud service used.

3. Optimize Cloud Usage & Cost 🌐:

• Architecting for Cloud: Designing cost-efficient cloud architectures.

• Workload Optimization: Adjusting workloads for optimal performance and cost.

• Rate Optimization: Securing the best pricing and discounts.

• Cloud Sustainability: Ensuring long-term cost efficiency and environmental sustainability.

• Licensing & SaaS: Managing software licenses and SaaS subscriptions effectively.

Manage the FinOps Practice

This section focuses on the operational aspects of implementing FinOps:

• FinOps Practice Operations: Running the day-to-day operations of the FinOps team.

• Cloud Policy & Governance: Establishing policies for cloud usage and cost management.

• FinOps Tools & Services: Utilizing tools and services to support FinOps activities.

• FinOps Education & Enablement: Training and enabling teams on FinOps practices.

• Invoicing & Chargeback: Managing billing and cost allocation back to business units.

• Onboarding Workloads: Ensuring new cloud workloads are cost-optimized from the start.

• Intersecting Disciplines: Integrating FinOps with other organizational disciplines.

Core and Allied Personas

Core Personas: These are the primary roles involved in FinOps:

• Engineering 🛠️

• FinOps Practitioner 💼

• Finance 🧾

• Leadership 👔

• Procurement 📦

• Product 📈

Allied Personas: These roles support and intersect with FinOps activities:

• IT Asset Management (ITAM)

• IT Financial Management (ITFM)

• IT Service Management (ITSM)

• Security

• Sustainability

Phases

The FinOps process is cyclical and consists of three phases:

1. Inform 🧠: Collecting and analyzing data to gain insights.

2. Optimize 🔧: Implementing strategies to reduce costs and improve efficiency.

3. Operate ⚙️: Managing and refining operations continuously.

Maturity

Organizations typically progress through three maturity stages:

1. Crawl 🐢: Initial phase where basic FinOps practices are implemented.

2. Walk 🚶: Intermediate phase with more structured and consistent FinOps processes.

3. Run 🏃: Advanced phase with highly optimized and mature FinOps practices.

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The FinOps framework is designed to bring financial accountability to cloud spending, ensuring that organizations can maximize the value they derive from their cloud investments. By following this structured approach, businesses can optimize their cloud costs, improve financial visibility, and drive collaboration across teams.